Jabil Inc Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ruplu Bhattacharya - BofA Global Research - Analyst : Mike, you raised the full year revenue guide by over $1 billion. There's lots of things that are happening in the intelligent infrastructure space. The slides mentioned some new wins, can you give us some more color on those? There are a lot of new projects coming up as well, like the OpenAI, AMD, Anthropic, AWS. I mean do you think Jabil has the intent or the opportunity to benefit or some of those projects? And then there are other things you mentioned like retrofitting factories for liquid cooling and acquiring Hanley Energy Group. So maybe just lay out for us the impact of all of these factors. And overall, would you say the guidances for the fiscal year is still conservative?

Question: Ruplu Bhattacharya - BofA Global Research - Analyst : Okay. For my follow-up, if I can ask operating margins, Jabil is going to be at 5.7% operating margin this fiscal year. So is it reasonable for investors to assume that operating margin can get above 6% in fiscal '27, what are the puts and takes there? And longer term, how high can operating margin go? Like with the current mix of business, do you see Jabil getting to 7% operating margin at some point? So just your thoughts on next or what should we keep in mind in terms of operating margin progression and how high that can go over time? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 17, 2025 / 1:30PM, JBL.N - Q1 2026 Jabil Inc Earnings Call

Question: Ruplu Bhattacharya - BofA Global Research - Analyst : Got it. If I can sneak one more in. Looking at healthcare and packaging, for the last three, four years, it's been mostly flat. This year, it's growing low single digits to $5.6 billion. Any thoughts like you had talked about some further J&J type of deals and you've got this impact from Croatia. Can you give us some more color on how you think that business can evolve? Is it still a low single-digit business going forward? Or do you think it can accelerate?

Question: Steven Fox - Fox Advisors LLC - Analyst : I had two questions, if I could. I guess, first of all, just switching gears. On the healthcare business, like you mentioned, Mike, it's been very steady. My understanding is providing pretty good margins for you guys as well. I guess off of all the growth you're seeing in cloud, what's the prospects for maybe us more aggressively to accelerate that growth since it's such a good contributor to profitability? And then I had a follow-up. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 17, 2025 / 1:30PM, JBL.N - Q1 2026 Jabil Inc Earnings Call

Question: Steven Fox - Fox Advisors LLC - Analyst : Great. That's helpful. And then just on the cloud business. So a quarter ago, you were warning us about that you still face some bottlenecks later in the year. Now you're ahead of schedule a little bit, which is great, and you're talking about what sounds like a bigger pipeline. So I'm just wondering how we sort of equate your ability to meet demand or meet the growth expectations of adding a new customer or existing customers with all the capacity you have or may need? Like how are you planning out beyond this year for capacity in order to continue to grow that cloud business?

Question: Steven Fox - Fox Advisors LLC - Analyst : Great. And thanks for all the visibility into your numbers. This is really helpful.

Question: Ruben Roy - Stifel - Analyst : Mike, I wonder if you could spend a minute on just kind of longer-term thinking around Hanley. And I'm wondering, there's been a lot of discussion, obviously, around power and power distribution as the industry is trying to figure out how to get to 800 volts current. And if you think about this acquisition longer term, one of your competitors have been talking a lot about modularized power. Does this help you, do you think, in terms of content per rack and gaining more server rack business by having this? Or is the strategy maybe a little bit different as you think about adding that into the mix? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 17, 2025 / 1:30PM, JBL.N - Q1 2026 Jabil Inc Earnings Call And also one follow-up on that is, would they own the design of the power distribution? I imagine that's the answer would be yes, given the EBIT margins that you get, but any color on that would be helpful.

Question: Ruben Roy - Stifel - Analyst : It's a lot of detail. I hope this is a quicker follow-up. But just on the capital equipment. I think you said that was in line with your expectations, maybe a little bit better. Is there any change to I guess, on your sort of thinking around overall spend in the capital equipment market relative to 90 days ago as you think about this year?

Question: Melissa Fairbanks - Raymond James - Analyst : I wanted to start off by asking about automotive and transport. You see that you maintained the outlook for the full year, down a little bit from last year. Just wondering if the mix of that business or any of kind of the geographical trends have changed. We have heard from some suppliers, Europe suppliers are being a little bit more cautious going into next year? Just wondering what the complexion of that business looks like in the near term?

Question: Melissa Fairbanks - Raymond James - Analyst : Okay, great. Keep up the good work. Maybe just a quick follow-up. Everyone has to ask about at least one question on data center. As you're ramping your second hyperscale customer. I know your lead hyperscale customer. A lot of that business goes through consignment. Just wondering how much, if any, of some of these new programs that you're ramping are on consignment, and the gross revenue is actually coming in a little bit better than even what we're seeing on the net revenue side?

Question: Melissa Fairbanks - Raymond James - Analyst : Great. Congratulations.

Question: Mark Delaney - Goldman Sachs - Analyst : Do you able to took up its view for AI growth this year to 35%. I realize you already spoke on your own capacity planning. Can you speak to any constraints your data center customers may face from the supply side, including having enough power supply to their data center sites? And to what extent you factored any constraints they may be seeing into your guidance?

Question: Mark Delaney - Goldman Sachs - Analyst : Very helpful. Mike, last quarter, you mentioned the possibility of winning that third hyperscaler customer and you spoke to that possibility again on the call today. Can you give more color on that, including what types of product or products you're hoping to sell to that CSP and when you think you may know if you've converted on that opportunity?

Question: Tim Long - Barclays - Analyst : Two, if I could, as well. First, I was hoping you could touch a little bit on that the larger hyperscale customer wasn't really excited as a part of the strength here. So curious what kind of trends are going on there. I do think there's some product transitions in some of their compute platform. So curious if that impacting or if there's anything else going on there? And then secondly, just more broadly, a lot of movement around custom ASICs and XPUs. Curious how you see Jabil participating, obviously, PPU gaining a lot of traction and announcements at least over the last few months, how you see Jabil playing in the toll XPU directly and related type of equipment?

Question: Tim Long - Barclays - Analyst : Just on XPUs and custom ASICs and the play directly into that product and peripheral what it means for the rest of the rack in Jabil's participation.

Question: David Vogt - UBS Equities - Analyst : So Mike, maybe one for you and one for Greg. So you talked about strength in data center infrastructure powered networking. We're folding Hanley into the numbers. We're seeing strength in the second hyperscaler above expectations. I guess what I'm trying to think through is LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 17, 2025 / 1:30PM, JBL.N - Q1 2026 Jabil Inc Earnings Call how do you think about the second half of your fiscal year, particularly given what the growth implies is a fairly meaningful deceleration where the underlying demand probably doesn't support that view. Is that just a rev rec issue? Is it a capacity issue? How should investors think about sort of the second half of the year, which kind of implies like 10% growth dynamic is there enough capacity? And then maybe I'll give you my question as well. Obviously, you took up the full year numbers for revenue margin in EPS and less kind of the free cash flow outlook unchanged. I recognize that CapEx is probably going to go up, I don't know, $50 million to $100 million year-over-year. Anything else from a working capital perspective or a timing perspective that impacts free cash flow this year versus your original expectations?